Exchange traded funds (or ETFs) can be a cheap and cheerful way of easily adding some diversification spice into your portfolio. Although a lot of us love dividend-paying mammoths like Commonwealth Bank of Australia (ASX: CBA), there is a world outside our big ASX blue-chips and we should all get a piece of it (at least in my humble opinion).
Here are 2 exotic ASX ETFs that can help you do just that.
Betashares Nasdaq 100 ETF (ASX: NDQ)
This ETF from BetaShares tracks the top 100 companies in the US NASDAQ index. You may not realise, but over in the US, they have two main stock exchanges (NASDAQ and the New York Stock Exchange (NYSE)). The NASDAQ is famous for being the 'hipper' of the two – almost all the big tech companies, as well as the new kids on the block like Uber, are NASDAQers.
I think exposure to the NASDAQ index is a great idea, as it filled with companies like Amazon, Apple, Alphabet, Netflix and Tesla who are all shaking up the world as we know it and NDQ gives you a slice of the top 100. NDQ charges a management fee of 0.48% and has generated returns of around 23% each year over the past 3 years.
ETFS Physical Gold ETF (ASX: GOLD)
This ETF is a little different, as it only invests in holding physical gold bullion. While this may not be for everyone (hence exotic), many famous investors like Ray Dalio recommend holding at least some gold as a hedge against the stock market and inflation. Mr Dalio says that gold is essentially cash, but with better value and usually outperforms during any kind of international or economic turmoil. He also puts his money where his mouth is and has a large ownership in a US gold ETF himself.
GOLD is an easy way to 'own' gold without having to get it delivered and safely stored. The ETF holds its gold interests in an HSBC bank vault in London, so you can be pretty confident it's in good hands. GOLD shares have a management fee of 0.4% and have generated a return of 7.95% over the past year.
Either of these two ETFs would be a useful vehicle to add some spice to your portfolio going forward. I like the idea of GOLD but I think the NDQ ETF is more exciting because it gives us easy access to some of the biggest movers and shakers out there!